Some Connecticut residents and others across the country have elected to file bankruptcy to confront overwhelming financial burdens responsibly and to get a fresh start on their finances. Many choose to file for Chapter 7 bankruptcy, where an individual’s nonexempt assets are sold to pay creditors. There are certain assets that are determined to be protected and are not used for the payments to creditors. Recently, a dispute over what assets are protected occurred in one of the country’s Bankruptcy Court of Appeals.
According to court records, a man had received the proceeds in his ex-wife’s individual retirement account as well as half of her 401(k) balance in his divorce agreement. At the time of the divorce, the court had instructed the man to submit a QDRO, or qualified domestic relations order. However, the man failed to follow the court’s instructions.
The man subsequently filed for Chapter 7 bankruptcy. He contends that the retirement funds he received from his wife should be exempt from creditors in the bankruptcy proceedings. The bankruptcy court did not view it the same way; it ruled that the money did not meet the definition of retirement funds established earlier by the Supreme Court.
There are many factors to consider before filing Chapter 7 or another type of bankruptcy. Whether a divorce is anticipated or retirement fund decisions are looming, it is important to address all these financial issues. A Connecticut bankruptcy attorney can help clients navigate through every step of the legal process. An experienced lawyers will help individuals determine the best path forward to get them back on thee right track financially.